MARCOS II vs.

CA

273 SCRA 47

GR No. 120880, June 5, 1997

"The approval of the court sitting in probate is not a mandatory requirement in the collection of estate
taxes."

"In case of failure to file a return, the tax may be assessed at anytime within 10 years after the
omission."

FACTS: Bongbong Marcos sought for the reversal of the ruling of the Court of Appeals to grant CIR's
petition to levy the properties of the late Pres. Marcos to cover the payment of his tax delinquencies
during the period of his exile in the US. The Marcos family was assessed by the BIR after it failed to file
estate tax returns. However the assessment were not protested administratively by Mrs. Marcos and
the heirs of the late president so that they became final and unappealable after the period for filing of
opposition has prescribed. Marcos contends that the properties could not be levied to cover the tax
dues because they are still pending probate with the court, and settlement of tax deficiencies could not
be had, unless there is an order by the probate court or until the probate proceedings are terminated.

Petitioner also pointed out that applying Memorandum Circular No. 38-68, the BIR's Notices of Levy on
the Marcos properties were issued beyond the allowed period, and are therefore null and void.

ISSUE: Are the contentions of Bongbong Marcos correct?

HELD: No. The deficiency income tax assessments and estate tax assessment are already final and
unappealable -and-the subsequent levy of real properties is a tax remedy resorted to by the
government, sanctioned by Section 213 and 218 of the National Internal Revenue Code. This summary
tax remedy is distinct and separate from the other tax remedies (such as Judicial Civil actions and
Criminal actions), and is not affected or precluded by the pendency of any other tax remedies instituted
by the government.

The approval of the court, sitting in probate, or as a settlement tribunal over the deceased's estate is not
a mandatory requirement in the collection of estate taxes. On the contrary, under Section 87 of the
NIRC, it is the probate or settlement court which is bidden not to authorize the executor or judicial
administrator of the decedent's estate to deliver any distributive share to any party interested in the
estate, unless it is shown a Certification by the Commissioner of Internal Revenue that the estate taxes
have been paid. This provision disproves the petitioner's contention that it is the probate court which
approves the assessment and collection of the estate tax.

On the issue of prescription, the omission to file an estate tax return, and the subsequent failure to
contest or appeal the assessment made by the BIR is fatal to the petitioner's cause, as under Sec.223 of
the NIRC, in case of failure to file a return, the tax may be assessed at anytime within 10 years after the
omission, and any tax so assessed may be collected by levy upon real property within 3 years (now 5
years) following the assessment of the tax. Since the estate tax assessment had become final and
unappealable by the petitioner's default as regards protesting the validity of the said assessment, there
is no reason why the BIR cannot continue with the collection of the said tax.